Project Management Bus 4017 Week 5. Feb. 3, 2003

Agenda: Reminder: Charter, Communication matrix, Responsibility matrix did you complete it for the

World Trade Tower exercise – for your own records? Hand in Terms and definitions-2 marks. Keep a copy. Review last week’s learning-WBS pop quiz. Keep your

copy, but give me one. 1 mark.

Groups, Finish the tea WBS and 2 charts-Instructor review.

New Learning: Theory, Estimating and bids.P. 153-178 Group activity-building a data base –as a complete project.

Terms and Definitions – assignment

Turn in at start of class Wk. 5 What? 2 or more pages of single spaced. Where from: the movie, Verzuh book,

PowerPoints, and class web sites. Why? So you understand the meanings

when you take the midterm. So the classes have more meaning.

Review so far

Project definition = Develop S.O.W (Purpose, scope, deliverables, responsibilities).

2. Risk management strategy3. Work breakdown structure-relationships

4.Estimates-work packages 5. Schedule-calculate CPM and Float6. Assign and level resources7. Redefine any/all above to achieve cost,

time and quality equilibrium. Iteration-first pass. Continue to redefine

Negotiation in organizationA Proper Approach• Firms should view conflicts within the organization as conflicts between

allies, not opponents• Approaching intra-project conflicts with a desire to win a victory over the

other parties is inappropriate• The project manager should remember that he/she will be negotiating

with project stakeholders many times in the future• The proper objective should be to optimize the outcome in terms of

overall

Negotiation key points.

Some of 16 steps

1. E.g.Disregard appearances

2. Frame each issue3. Acknowledge legitimate

points4. Focus on common

interests5. Give them a stake6. Resources you share –

identify, etc.

If they wont negotiate

Examples of phrasing when the other party reuses to negotiate or use dirty tricks.

E.g. please correct me if I’m wrong

Get a third persons input-an authority preferred

Example Continued: Constructing a PERT or CPM Schedule

Step #4 – Add in the times required to complete each task.

The Critical Path is then defined as the path with the longest duration from Start to End

Step #5 – Calculate Slack for activities which do not appear along the Critical PathFind out the earliest start time (EST) and latest start time (LST) for each task so that the duration of the project is not impactedSlack is the difference between the EST & LST

Example; Duration of the Project is 19 daysActivity E requires 5 days to be accomplishedLST: Activity E must be started by Day 14 (19-5) so that the project is completed by Day 19EST: Activity E depends on Activity B being completed. The earliest B can be completed is Day 4. Thus the earliest Activity E could Start would be Day 5

6

2

5

8

4

5

Critical Path = A,C,F (19days)

Therefore the slack in this example is _____ days 10

Example Continued: Constructing a PERT or CPM Schedule

Step #4 – Add in the times required to complete each task.

The Critical Path is then defined as the path with the longest duration from Start to End

Step #5 – Calculate Slack for activities which do not appear along the Critical PathFind out the earliest start time (EST) and latest start time (LST) for each task so that the duration of the project is not impactedSlack is the difference between the EST & LST

Example; Duration of the Project is 19 daysActivity E requires 5 days to be accomplishedLST: Activity E must be started by Day 14 (19-5) so that the project is completed by Day 19EST: Activity E depends on Activity B being completed. The earliest B can be completed is Day 4. Thus the earliest Activity E could Start would be Day 5

6

2

5

8

4

5

Critical Path = A,C,F (19days)

Therefore the slack in this example is _____ days 10

P.E.R.T. elements on the network diagram

Be able to draw a box as per book showing above.

Float/slack: Look at the PERT box and note difference between the ES and the LS times.

Critical path is defined by the overall times of PERT boxes in which there is no float.

Task ID #

Time (duration)

ES LS

EF LF

Float

Slack or float

1 2 3 4 5 6 7 8 9 10 11

12 13 14 15 16 17 18 19

B B B B E E E E E

E E E E E

E FLOAT TIME 9 DAYS

Task. E Time.5

Earliest start. 5

Latest start14

Float 9 days

From the example. Previous page enter calculations and check

answer. E can be started

from 5th to 14th. Need 5 days to do job. Cant start till B done.

E FLOAT TIME 9 DAYS

Today’s class as a WBS

Term s W B S q u iz

H om e work

P ot o tea D ata b ase

G rou p workTyp e tit le h ere

E s tim ates

N ew learn in gTyp e tit le h ere

H ou sekeep in g R eview

O th er

W eek 5 C lass

Group work-complete the Pot of Tea

Show WBS diagram Show Network Schedule Show GANTT chart

New Learning: Estimating and budgeting. Verzuh. P. 153-178

Estimating is an art and science.

Estimate is a forecast. Hard to forecast future. Based on assumption rather more than facts.

Computers used for large estimates.Statistics and probability part of estimating large projects.

If the project is coming in under budget last phases estimates are bases on concave curve.

If estimates is coming in over budget last phase estimated based on convex curve.

Overestimating can result in loss of approval for project. Underestimating results in loss of profit and cancellation of projects.

Estimating can be used for time as well as $. Time estimates become schedules.$ estimates becomes budgets.

Budgets – are estimated then allocated.

Budgets usually are the $ provided or allocated to do the job.

They are approved based on the best estimates provided. Budgets can be managed or controlled They are detailed and follow accounting guidelines They are allocated by department or job. They can be be controlled in terms of cash flow. Budgets cover specific periods – usually a year. Budgets are based on

Estimates:Hi level

Top down methods (used upper and middle management).

a) Ball park to check if it’s worth making a detailed estimate. Best guess or x 2. Falls in a range? If still not good get some specifications and then ball part.

b) Order of magnitude – previous experience and relate to present project (bigger smaller, better or less quality?)

c) Apportioning – total budget allocated to phase of project as per hi level WBS. Need historical data. 1st phase done then re-assess. Overall estimate must first be accurate.

d) Phasing - estimate one product cycle as a project.

e) Apportioning and phasing combined.

Estimates: detailed

Parametric. Measure this and that and then apply to your specs. E.g. always need two types of info.Take out food. Dinner for one is $5.00. How much for 4 people?(info:price and people).Some saving due to quantity but roughly $18-20. Verzuh. P. 164-168

Estimating: hi level and detailed combined Phasing: estimates one project phase and product cycle at a

time. 1. Will use Order of magnitude to establish feasibility of

going ahead with detailed estimate for the phase.2. Will develop detailed estimate for the phase.3. Will provide magnitude for remainder of project.4. Repeat items 1 to 3 after each phase.In construction-do the estimate as per design and blueprints, (1st

phase) and see if cost of house is affordable to those specs. When detailed estimate (2nd phase). completed build first section of house. Estimate another section of house (3rd phase) then build.

Estimates, non detailed:

Top down are more general estimates.

Using various combined top down methods can be

accurate

Advantages: Not every detail needs to be

estimated. Upper management have access

to experience, access to historical records and big pictureof what is needed.

Will approve large amounts of money quickly

Disadvantages: Doesn’t include people doing the

job in the decision making Executives forget the cost of detailed

items and there can be many. Executives don’t always trust motives

Estimates, detailed:

Bottom up are detailed estimates.

Experts or team involvement

Use tasks from WBS to estimate

Must include your labour cost (aggregate/include benefits etc. )

Includes internal equip. costs

Include external suppliers

Advantages: Accuracy good More involvement of those

who do the job (good morale and qualified).

Disadvantages: Can be inflated Need to convince upper

management

Resolving top down vs bottom up using iteration

Upper and lower management seldom agree.

Upper management not in touch with some aspects.

Lower management protects themselves with “cushons” if things go wrong. (Murphy’s Law.

People who want project completed have bias to adjust budgets up or down.

Iterative process resolves the above.

Iterative process Lower (mgrs. ) departments,

ask for budget $ based on estimates.

Management sends estimate back, says too high.

Line managers adjust and explain why they need more $

Upper management begins to understand then give more $

Repeat above process until agreement or go ahead with project given and funds allocated (budgeted).

Questions about estimating:

Why do we estimate? What are 3 types of estimate that reflect levels of accuracy What are executive estimates called? What type of estimate would a bricklayer use? Does estimate and a budget mean the same thing? What two things can result from underestimating projects? Explain the term “Ball park estimating”? Would you use Ball park to price a task on the WBS? What is the relationship of the WBS to the estimate? What’s the process called when management sends the estimate

back to the workers and they revise and send it back?